Superannuation & SMSF
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- Protecting your Superannuation upon Death
Superannuation Guarantees
Are you an employer for Superannuation Guarantee purposes?
You, your company or your business is an employer if you employ a person through a verbal or written employment contract on a full-time, part-time or casual basis.
Do you have to pay Superannuation for your employees?
Generally you must pay Superannuation to your employees if they:
- Are aged between 18 & 69 years old;
- Are paid $450.00 by way of salary or wages per month before tax; and
- The employee works either on a full-time, part-time or casual basis.
You also have to pay Superannuation for anyone who is an employee if they are under the age of 18, are paid $450.00 or more in salary or wages per month before tax and the individual works 30 hours or more in a week.
Do you have to pay Superannuation Guarantee for Contractors?
If you employee a contractor and you pay that contractor under a contract that is wholly or principally for labour, e.g. you are a builder and you employee a labourer to carry bricks for you, you have to make super contributions for them. This is the case even if they hold themselves out to be an independent contractor and even if they provide you with an Australian Business Number (ABN).
In most other instances you do not have to make Superannuation contributions to contractors.
Do you have to pay the Superannuation Guarantee if you are self-employed?
If you are self employed, you do not have to make super contributions to a Super Fund on your own behalf. You may wish to consider Superannuation however as a form of asset protection and/or a method for saving for your retirement. Importantly most self employed people can claim a full deduction for contributions they make as there Super Guarantee to their Superannuation until the age of 75. For more information on the benefits of Superannuation Guarantee payment as a method of Asset Protection please refer to our web page dedicated to Asset Protection.
When do you pay Superannuation Guarantee contributions?
You must pay Superannuation Guarantee contributions on a quarterly basis. The four quarters in which the Superannuation Guarantee contributions must be paid are dictated by the Australian Taxation Office (ATO) and are as follows:
- Quarter One – 1 July – 30 September
- Quarter Two – 1 October – 31 December
- Quarter Three – 1 January – 31 March; and
- Quarter 4 – 1 April – 30 June.
You must make each quarterly payment of the Superannuation Guarantee contributions for the quarterly payment cut off dates as stipulated by the Australian Taxation Office. These cut-off dates are as follows:
- Quarter 1 – 28 October
- Quarter 2 – 28 January
- Quarter 3 – 28 April; and
- Quarter 4 – 28 July
How much must you pay as Superannuation Guarantee contributions?
Under the relevant legislation you must pay a minimum of 9% of each eligible employees ordinary time earnings. This means that you must usually pay 9% of the amount that each employee earns for their ordinary hours of work. For example, if an employee earns $40,000.00 per annum for working ordinary hours of 28 hours per week, you must pay by way of Superannuation Guarantee contributions on behalf of that employee the amount of $3,600.00.
Where do employers have to pay Superannuation Guarantee contributions?
Employers must pay Superannuation Guarantee contributions into an ATO complying Superannuation Fund. Generally employees are able to choose the Superannuation Fund you pay there Superannuation Guarantee contributions into.
If an employee requests that you pay their Superannuation Guarantee contributions into a Self Managed Superannuation Fund (SMSF) you must request confirmation from that employee that the SMSF is an ATO complying Superannuation Fund. For more information on SMSF’s please refer to our web site pages setting up an SMSF and Borrowing through a SMSF.
Do employers need to offer employees a choice of Superannuation Fund in which the employer will pay that employee Superannuation Guarantee contribution?
Employers must provide employees with an ATO standard choice form which can be obtained from the ATO website to all new employees who are eligible to choose a Superannuation Fund that they wish to have their Superannuation Guarantee contribution paid into. Employers need to provide this form to employees within 28 days of the day after the employee starts working for the employer.
What records must employers keep in relation to the payment of Superannuation Guarantee contributions to employees?
Employers must keep detailed records in relation to the payment of Superannuation Guarantee contributions to employees. These records must show:
- The amount of Superannuation Guarantee contribution paid by the employer to each employee;
- How the employer calculated the amount of Superannuation Guarantee contribution paid to the relevant employees; and
- That the employer offered all of their eligible employees a choice of Superannuation Fund into which the Superannuation Guarantee contribution would be paid.
What happens if employers do not meet their Superannuation Guarantee contribution obligations?
If Employers don’t meet their Superannuation Guarantee contribution obligations the employer must pay a Superannuation Guarantee charge and lodge a Superannuation Guarantee Charge Statement – quarterly with the ATO by each quarter by the due date stipulated by the ATO.
Employers must pay a Superannuation Guarantee charge to the ATO if the employer does not pay:
- Enough Superannuation Guarantee contributions (at least 9%) to each eligible employee of that employer; or
- Superannuation Guarantee contributions by the cut-off date for payment each quarter; or
- The Superannuation Guarantee contributions to each employees chosen Superannuation Fund.
Ferguson Cannon Lawyers have an experienced team of lawyers that will be able to assist you with all of your requirements relating to SMSFs. For any further queries please do not hesitate to contact Byron Cannon, Director, or Samuel Barber, Lawyer on 07 5443 6600, or email byron@fclawyers.com.au or sam@fclawyers.com.au.
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